The Rise of Indigenous Conglomerates into Indonesian Politics


A brief post before this thought escapes my mind.

Some tweets from @revolutia in twitter today regarding Indonesian Chinese ethnic (will be called Tionghoa from here on) conglomerates and ORBA policy reminded me of my thought about Soeharto Tionghoa discrimination policy that I’d like to write from a long time ago but never had the chance to do it.

As we know, in ORBA era President Soeharto implemented discrimination policy towards Tionghoa in almost every aspect of life except business. Soeharto had been very helpful to his Tionghoa businessmen friends, issued government facilities and protections for their businesses. Facilities were given in form of letters of credit, tax incentives, and right to monopoly. Protections for security were given for the business daily operation and also involving some land clearing. Meanwhile indigenous (pribumi) businessmen seldom had that privileges except those inside his closest ring.

The question will be why was that? Why did Soeharto discriminate Tionghoa but help them in business? It’s not a like dislike thing, it’s a well thought strategy from our Smiling General. The discrimination towards Tionghoa made sure they will never enter politics and only interested in business. By doing this, Soeharto had the “money” in his side. Monopoly in business means Tionghoa businessmen became the richest in the country, far richer than their indigenous rivals. This strategy also caused indigenous businessmen would not be able to have enough money for politics thus preferred to side with government resulted in Soeharto didn’t have any serious opposition at all. It was not only those Tionghoa businessmen that got rich, this strategy also helped Soeharto to amass $15 billion fortune during his reign (estimated by TIME in 1999).

No script could be perfect though, there were some Tionghoa businessmen that opposed Soeharto monopoly of business and politics but they were wiped out immediately. William Soeryadjaya – founder of ASTRA, second biggest business group at that time was stripped from his business kingdom ruthlessly by Soeharto and his conglomerate friends (see my post of Oom Willem obituary).

For 32 years, this strategy succeeded perfectly until the monetary crisis in 1997-1998 hit the country. Loyal Soeharto supporter, those Tionghoa businessmen left debt in their own banks in amount big enough to collapse the country. Soeharto was stripped of his main powers in politics: the money and loyal friends. IMF required liquidation of banks (mostly owned by those businessmen and of which were used to fund their collapsed businesses) to save the country. Those Tionghoa friends of Soeharto facing utter destruction of their business and bleak future in the country immediately fled to Singapore, Australia, leaving this Lone General in the mess. Student protests everywhere demanded him to step down. Some even shouted for public court of the Dictator. Facing no option, he stepped down, leaving big burdens (and debts) to the country which are unsolved until now.

The falling down of Soeharto and ORBA era means a new era of politics and business in this country. Tionghoa businessmen don’t have the same privileges they previously enjoyed and Indigenous businessmen don’t have the obstacles of monopoly anymore. We observed the rise of indigenous conglomerates without Cendana stamp like Panigoro, Bakrie, Kalla, Tanjung. We also saw how some of them powered their business with their activities in politics and later powered their politics with money from business. So in this post-ORBA era we witness the rise of indigenous conglomerates into Indonesian Politics.

So if you have ever wondered why there were stability in government and politics in ORBA era and now we are facing the opposites day today, you have the answer.

Business and politics are powerful combination to play. Add to that combination the third one: the media. Being aware of media significant role in politics, especially in this modern democracy, some businessman-politicians started building their media empire. We know the major two News TV stations are owned by businessman-politicians. And in this era of modern democracy without authoritarian government, they could play their parts in politics effectively.

I have to end this article up to this part. I’ll write the second part in few next days. Thanks to @revolutia for some fresh thoughts where I drew my inspiration from. For the mean time feel free to discuss in comments section below.